Credit Report-Understanding Your Fico Credit Score

Credit reports and understanding your FICO credit score is essential whether you are trying to buy a home, a new car or applying for a credit card. Lenders will want to determine the risk their taking by lending you the money. Most lenders use your FICO credit score (you have 1 score for each of the 3 major credit agencies) to determine if they are willing to lend you money, how much money and at what terms you will receive.

FICO Credit Score-What exactly is it and how do they get it

Your FICO credit score, named after the company that developed it, Fair Isaac & Company is a number between 350 and 850 ( though some reports have it going as high as 900). Lenders believe the higher the number, the better chance you will make your loan payments and make them on time. They use a variety of information to come up with this score. It’s often been compared to a laundry list of all your credit accounts, all payment history, as well as some other personal information that when combined together will be the determining factor for most lenders as to your credit worthiness.

FICO Credit Score – Let’s Brake It Down.

Payment History – 35% of your score is based on your payment history of making payments on time and not missing any. This probably is the most important item lenders will look at when determining your credit worthiness.

Amount Owed – 30% of your score is based on this number. This is derived by taking amount you owe relative to amount of credit available. Your considered a higher risk if your close to maxing out your credit. Lenders believe your more apt to late payments therefore lowering your credit score.

Length Of Credit History – 15% of your FICO credit score will be based on this number. This is just how it sounds. The longer you have an account opened in good standing, the better your credit score. Simply put, your score considers your oldest account and average length of all accounts.

New Credit – 10% of your FICO credit score is determined by this factor. Opening up several new accounts in a short period of time is not a very good idea. This can lead to a lower score. Also, the amount of inquiries can affect your score as well. This does not include any inquires made by you, a potential employer, or if done so by a lender wanting to send you an unsolicited pre-approved credit offer.

Types Of credit In Use – 10% will be determined by the various mix of credit lines currently in use by you. Such as credit cards, retail accounts, finance company loans as well as mortgage loans are considered.

FICO Credit Score – How Do I Measure Up?

Roughly 60 percent of people have credit scores of 700 and above. A score of 720 is the number everyone should be shooting for. If your score is 720, there’s really no need to try and raise it because lenders lump you in the same category as folks with a score of say 800 or 820. With a score of 720 or above, lenders will consider you a safe risk and typically you should receive what you need at a good rate with no problems. If however, your score is below 700, then it is definitely worth your time and effort to pump up that number.

If your looking to increase you FICO credit score, just check out our how to fix credit products and services and see what resources our site has to offer.

The Average Credit Debt For Americans

The average credit debt for each American has risen from around $10,000 for 2009 to well over $11,000 for this year. The average credit debt per household’s  is around $18,000 to $21,000 and doesn’t include mortgages. It is 12% higher for this year compared to last year. Over one quarter of the population in the U.S. is ranked above the national average credit debt. Today, over 43% of Americans spend over 130% of what they actually make. This means that more people are relying on credit to get what they need or want. Today, it is very simple to obtain credit cards and loans. Lenders know that if they lend to you, you will have to pay that back plus interest. They extend credit to just about everyone regardless of history and credit scores. This makes it too tempting to resist by most of us that have no willpower when it comes to spending. These people now have access to an instant abundance of spending power that they’ve never had before contributing to the average yearly credit card debt of over $8,000. The lower interest rates that are being offered and enticing credit card advertisements are leading our nation into spending habits that are spiraling out of control.

Average Credit Debt-Understanding The Basics

Here is a pretty good guideline to follow if you would like to keep your households in line with what it should look like. Having a median household net income of around $46,000 yearly, you should only be paying about 50% of what you make on your debt. When making more, you can increase this amount by 10%-15%. This will leave you with enough to pay for other costs. Other expenses like food, transportation costs, utilities and expenses need to be factored into what you pay out also. Just remember that the more outstanding debt that you have, your credit score will be lower. Your outstanding debt makes up 30% of this score and your payment history makes up another 35%. The average credit score is around 690. The highest score available is 850 but it is rather difficult to maintain that type of score unless you make millions. The majority of us have less than perfect credit history, thus causing lower scores for some areas. This information makes you wander what happens to the percentage that is spending more than they make, doesn’t it? Well, this percentage is what leads to bankruptcies and foreclosures. In the past decade, as the average credit debt per American household rose,  the  amount of bankruptcies has doubled.

There is a way of reducing the average credit debt. If we all take responsibility for our own spending habits, we could make a difference in not only our own lives but also others around us as well. We can set good examples by paying our bills on time and by being responsible when it comes to how we use our credit. Who knows? Maybe we can set good examples for our country as well.

Debt-What Keeps Us There

October 7, 2010 by  
Filed under Credit Basics, Free Debt & Credit Information

Debt, and what keeps us there is really no big secret. There are some very identifiable reasons of why most people get stuck at a certain point in their finances and can never seem to get out from. So if your ready, here they are(see which ones you can identify with).

1)- Not knowing or wanting to know your own limits. I know, it’s always the Jones-es fault. Most people are always trying  to keep up with the Jones-es. Well, stop talking to Mr.and Mrs Jones then, and start talking to the Smith’s. I hear there a real nice couple.

2)- Fees- It’s time to start consolidating folks. Know what you really need and start eliminating the rest. There are bank fees, credit card fees,  ATM fees, interest, penalties,overdraft, and countless others. Understand them, and know who is charging you them, and then eliminate as much of this debt  them as possible.

3)-Paying the minimum. We already know the outcome to this one folks. Pay the minimum on  couple thousand dollar credit card and the banks will have you in debt to them for the rest of your life.

4)-Cash advances. I believe most card companies charge a minimum of $5.00 ranging up to $15.00. Then of course will get the privilege of paying interest on that.

5)-Payday loans. I don’t even want to get started with this blatant legalized loan sharking scheme. Try charging these rates  to local neighbors and see how long it takes for you to get locked up.

6)-Negotiating. Don’t ever be afraid to call up creditors and negotiate better rates. Just do your homework first, and use their competition against them if needed. just get that lower rate. Period

7)-Ignorance. You must fully know where all your money is going. I’m not suggesting you become Mr. Scrooge now with your money, and you don’t have to keep your wallet under lock and key, but know where your money is going each month by keeping better records of it. Put together a manageable budget and stick to it. And also, understand all your financial options when you run into some type  of problem or unforeseen emergency.

There you have it folks,  the reasons why people get stuck in debt.

Using On Line Credit Services To Your Advantage

Whether you have plenty of money or not enough, it is easy to mismanage what you have. If you have plenty, you probably lose track of what you have. If you never seem to have enough, you always seem to have trouble stretching it. Either way, most of us have had problems when it comes to our finances at least once in our lifetime. When things get tough and we struggle, we often think that no one else is going through financial difficulties around us. But if you will look around, you will notice that other people are struggling also to make ends meet. I’m sure that other people notice when you are down on your luck but are not able to help you since they are in the same situation that you are. Depending on other people is fine sometimes, but you find yourself wanting to fix the problems on your own without adding to theirs. This is when you can use on line credit services to your advantage.

On line credit services are available to all of us in many forms. Knowing where to look can help us to help ourselves with the problems that we are having with our finances. We can venture into a world of knowledge about finances with the help of our computer alone. By looking on the web, we can look for videos and books that will not only teach us how to fix our problems but will also help us to come up with ways to save for our future. You can find incredible tools to help you in different areas also. Learning to budget on smaller incomes and finding ways to improve your credit score are just a few that will help you. You can also take advantage of on line credit services that are offered through your bank or lending company. They can also help you to budget, reverse bad credit, and increase credit scores. While some of these services are free for the asking, others may cost you a small fee. Either choice, you will find answers that will help you to achieve the financial goals that you set for yourself.

By using on line credit services, you will not only help yourself but you may make it easier on the ones that help you by not having to support you. It is never too late to start standing on our own two feet. By reversing our finances, we not only take away stress but we’ll also learn a new way of life. A life filled with great expectations as we achieve our goal of financial freedom. If we are so dependent on others now, what will happen when those people are no longer there to help us? Can you make it on your own? For how long? We need to fix our own finances so that we can depend on ourselves instead of everyone else. Don’t you think?

The Credit-Debt-Help-Site has all the tools you will need from “DIY” credit repair, credit repair services, debt consolidation, and debt eliminator software. Just go to top of page and click on our various tab buttons and check out all of our services and products. Also click on the Google links located in the gray boxes at the top, bottom and on the right hand side of every page.

The Average Credit Debt in America Continues to Rise

October 1, 2010 by  
Filed under Featured, Free Debt & Credit Information

Every year, the American consumer raises there average credit debt by 12%. Last year, the credit debt average per consumer was $10,300. This year, it has increased to more than $11,000. Without mortgages being included, an average household debt is between $18,000 and $21,000. More than one fourth of United States’ population ranks higher than the nations average credit debt. More than 40% of us are spending 130% more than we make today. By these numbers, we can see that as a society we are sinking to a new level of credit downfall. Meaning that we rely more on credit than ever before to help with things when we don’t have enough cash to pay for it. While this is good for lenders and credit card companies, it is not so good for you and me. Not only are we sinking more and more in debt, we are also easy prey for companies to take advantage of our financial situations. By making it incredibly easy to get credit cards and payday loans, companies are luring you in with incredible deals to start with, then changing the rates after you are hooked. Most of these places will lend to anyone with a check stub or checking account regardless of credit scores, history or credit debt. For people that already have debt or spending issues, this can be adding even more financial troubles to their already existing ones.

In order to fully understand how high the average credit debt in America is, let’s look at some practical numbers. If you make up to $46,000 yearly, you should only be using half of that for your debt. The other half should be used for savings, expenses, clothing and food. If you earn more than $46,000, you can spend 10%-15% more on your credit debt. If you are one of the unfortunate ones that make a lot less than this amount, you may have to spend more than 50% depending on your debt level. If you are having serious debt issues, you may want to seek help to resolve financial situations that you cannot handle on your own. If you have a lot of outstanding debt, this could affect your credit score by making it lower. This in turn can affect your financial future. While your payment history makes up 35% of your credit score, outstanding debt makes up another 30%. Credit scores can range from being average at 690 to the highest at 850. Most of us will probably never see 850 on our credit score since it is virtually impossible to achieve. Lenders don’t like lending to you if you have more outstanding debt than they think you can handle at one time. So most will offer other solutions besides loans when that situation arises.

When trying to reduce credit debt, we can all make a difference. We can all use common sense and good judgment when it comes to spending. By teaching our children responsibility when it comes to paying bills and saving for tomorrow, we can lower the average credit debt and show them that there is a better way of living.

How Does Bad Mortgage Credit Affect Our Future

Having bad mortgage credit can drastically affect and hurt our future. In today’s economic uncertainty, we hear of more and more people losing their homes. Losing a home is devastating enough, but what most people don’t realize is that they have also lost their financial security. The affects of losing this security can go on for years and years and not only affect them but their families as well.  Having bad mortgage credit attached to your name can have an impact on what you buy and how you will be able to help your loved ones later in life to obtain the things that are needed and desired. We all think that it will be easy to pick up the pieces to our lives and move on. Sometimes it’s not as simple as we’d like.

The reason that you lost your home makes no difference when it comes to not paying for it. You are still labeled as having bad mortgage credit once you become delinquent. However, there is a difference when it comes to how you handle the situation once you’re behind. After you have fallen behind, the lender will notice what you try to do to remedy the situation. Say for instance, you put your home up for sale because you cannot pay the payments. You are trying to help the situation. On the other hand, you fall behind and do nothing until you are evicted. The person that tried to sell his home is going to get more help than the one that does nothing. Even though they are both going to have bad mortgage credit, the bank is going to be more willing to work with the person that tried to help his situation. Which one do you think will be able to get other loans in the future?

Having bad mortgage credit can affect whether we will ever be able to purchase another home. It can determine what percent and types of interest rates we get for our future loans. Also, it can impact whether we can cosign for our children’s loans when they get started or if we want to help them get through college. If we never get that second chance to own our own homes again, it can make a difference on whether a landlord will rent to you. Your credit history is used for utilities, rent, and cell phones and much more in today’s society. Imagine living a life where nobody trusted you. Imagine what it would be like to live on the streets, go without electricity, or go without a car to drive to work. Some of us have already been there and done that and want something better for our lives and our family’s lives. Are you willing to do what it takes to get back what you deserve? With a little dedication, you can.